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http://hdl.handle.net/10419/25578

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dc.contributor.author

Audretsch, David B.

en_US

dc.contributor.author

Sanders, Mark

en_US

dc.date.accessioned

2007-10-10

en_US

dc.date.accessioned

2009-07-27T09:20:47Z

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dc.date.available

2009-07-27T09:20:47Z

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dc.date.issued

2007

en_US

dc.identifier.uri

http://hdl.handle.net/10419/25578

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dc.description.abstract

This paper argues that globalization has led to a shift in developed countries from an industrial to an entrepreneurial model of production. Globalization is interpreted as a level shock in the supply of unskilled labor to the world economy, a decrease in the level of political risk associated with outward foreign direct investment (offshoring), and the widespread diffusion of a general purpose technology such as ICT. The im-pact of these exogenous shocks is then analyzed in a variety expansion model that distinguishes among three types of varieties. Following the life cycle we distinguish among new, mature and offshore production. The above shocks all result in a shift in comparative advantage in developed countries towards new varieties which corres-pond to the early stage of the product life cycle. Moreover, because entrepreneurs serve as agents that move varieties between life cycle stages, their importance in-creases due to globalization. The many new opportunities for profit benefit entrepre-neurs and skilled labor. By contrast, factors of production employed in the mature stages of the life cycle become less important. Thus, the model explains the emer-gence of what we label an entrepreneurial economy.